Shares of Cipher Digital Inc. (NASDAQ:CIFR) advanced 5.7% to $25.85 in late-morning trading on Thursday, extending a five-session rally that has pushed the stock up roughly 44%. The move comes as a sharp divide in the artificial-intelligence sector widens, with Cipher outperforming Alphabet Inc. (NASDAQ:GOOGL) by nearly 13 percentage points during the session.
Alphabet shares slid 7.2% after the company raised its 2026 capital spending outlook to a range of $195 billion to $205 billion. While Google Cloud revenue surged 82% to $24.8 billion, the company reported negative free cash flow of $5.9 billion. Alphabet finance chief Anat Ashkenazi commented that demand continues to outpace investment, underscoring the supply constraints that are benefiting Cipher's extended leasing strategy.
Cipher's market capitalization of $10.47 billion is roughly 92% of its reported $11.4 billion in base-term contract revenue. That ratio is nearly double that of Hut 8 Corp. (NASDAQ:HUT), which trades at about 49% of its contract value. Investors are assigning a higher equity value to each dollar of contracted revenue for Cipher, reflecting confidence in its leasing model amid the AI capacity crunch.
The company has secured contracts for 700 megawatts of high-performance computing capacity and projects $11.4 billion in revenue from its base lease agreements. Cipher forecasts average annualized net operating income of approximately $787 million for the period from October 2026 to September 2036. Its market cap is also 13.3 times that estimated NOI.
However, Cipher had not yet begun receiving lease income as of March 31. None of its three HPC leases had commenced, and the company reported no associated revenue. First-quarter revenue totaled $34.8 million, all from bitcoin mining, with adjusted EBITDA coming in at negative $48.2 million. Chief Executive Tyler Page described 2026 as 'the year of execution for Cipher' in May, with the next investor update expected before the market opens on August 4.
Key risks include potential construction delays that could trigger rent credits or additional tenant remedies. As of March 31, Cipher reported total debt principal of $5.21 billion and held approximately $715 million in unrestricted cash. The current share price reflects expectations beyond finalized contracts, and continued gains may depend on realized capacity and confirmed rental income.
Timing differences also play a role in valuation. Cipher anticipates starting operations at its Barber Lake facility in September, while phases of the Black Pearl project are set to launch in 2026. In contrast, Hut 8 projects deliveries from its newest lease to begin in the second quarter of 2028. The comparison is limited, as it does not account for debt, ongoing construction costs, profit margins, or contract length.
Notably, Alphabet's financial backing strengthens Cipher's position. Google guarantees Fluidstack's rental commitments for Cipher's Barber Lake facility, while an Amazon.com Inc. (NASDAQ:AMZN) subsidiary holds a lease on about 300 gross megawatts at the Black Pearl project. These relationships underscore the growing demand for AI infrastructure and the strategic value of Cipher's leasing approach.
